Landlord insurance extras

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    Landlord insurance extras

    Hi all
    i usually get buildings only insurance with a red telephone which has come in useful last year as the above flat leaked.
    Upon renewal i have been asked if i want optional legal expenses and rent guarantee cover .
    are these worth taking out?

    #2
    I seem to have survived 25 years as a landlord without these items. If you read the T and Cs of the legal cover you may find it does not cover eviction situations - the most likely reason landlords need help - you can get it hear for free!
    Rent guarantee - some landlords swear by this - I have never bothered. Always thoroughly check your tenants out and act quickly when things go wrong.



    Freedom at the point of zero............

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      #3
      With flats, you normally don't need buildings insurance, because the freeholder arranges that. You may need content and third party liability.

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        #4
        as interlaken says, it's' much much cheaper to self-insure when it comes to guaranteeing rent and make sure your vetting process prevents a situation where you will ever need to rely on insurance.

        if you have some history with the insurers simply say that you are willing to walk away unless they throw legal into the premium for free because it's standard on any landlord insurance policy I've ever read. They'll probably give it to you at that point as the risk to them of you claiming on it (seeing as you'd never missed it before) is negligible.

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          #5
          To my extremely pleasant surprise, the Freeholder had taken out a rent guarantee cover building insurance and as the insurance company messed up my claim, I had no tenants for, I think, about 16 months and full rent was covered by the insurer.

          I cannot tell you how happy I felt for having that 16 months' worth of income with zero hassle. But that was a one off.

          Find how what sort of cover they are talking about, what the restrictions would be, under what circumstances, how long for, what's the limit.

          I think in my case it was only meant to be for the length of the fixed term contract my tenants had been on (6 months). But somehow the insurer committed to doing all the work and covering the rent until the works completed.

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            #6
            Originally posted by tatemono View Post
            it's' much much cheaper to self-insure when it comes to guaranteeing rent and make sure your vetting process prevents a situation where you will ever need to rely on insurance.
            Why not do both?

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              #7
              like taking out travel insurance and then staying at home?

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                #8
                Originally posted by tatemono View Post
                like taking out travel insurance and then staying at home?
                If you're a landlord, then you're travelling.

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                  #9
                  you asked why not do both. Simple answer: waste of money.

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                    #10
                    Are you claiming your tenant selection is so good you've never had to evict or had a non payer?

                    Or do you mean over a landlords 50 year career, the premiums saved would cover the cost?

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                      #11
                      what I'm saying is that if you take out the insurance because you assume you will need it you are effectively saying, "I am accepting tenants who are likely to default." which, for us at least, is the wrong starting point. We'd rather start from the POV that we select tenants who are the kind of people who pay their dues and this then mitigates the need for rent guarantees. Our selection process isn't foolproof of course and maybe I'll be back here eating my words.

                      The OP asked if it was worth taking out rent guarantee insurance and, for us at least, it has not proved to be so. We've never had to evict. My wife and I have been letting property since 1998 and the only person who ever defaulted in that time was my sister (I learned the don't rent to relatives lesson the hard way). We lost about £1,600. Not sure what premiums on this insurance for an average of three rented properties would be over that period, but I assume it would be more than that.

                      I take a similar approach to the upselling of additional car rental insurance (I rent a lot as I'm an expat and constantly travelling). I'd rather not take it and drive more carefully than take it and think, "Well, I've got the insurance so it'll all be OK." In 20 years of renting all over the world, I've only had one accident ironically down the road in North Yorkshire when someone drove into the side of me. Their insurance paid the lot as they admitted 100% fault. Self-insuring is the far cheaper option for me.

                      In both cases, you have two options, lower the risk through preventive caution or accept the risk and insure for it. In the latter case, there's always likely to be other costs that the insurance doesn't cover (e.g. damaged property) which is something else to think about.

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                        #12
                        Originally posted by tatemono View Post
                        In both cases, you have two options, lower the risk through preventive caution or accept the risk and insure for it.
                        I often do both (amongst other things) but still think I've done worse than you overall. Although it depends on loads of different variables. For example, never had a default/eviction on my 4 beds but loads* on my 1 beds.

                        Back of a fag packet estimate, you would have spent £6000 on full time blanket insurance on your 3 properties.

                        £1500 on insuring for the first 12 months of each tenancy only (arguably the riskiest time).


                        *loads is a slight exaggeration but far too many for my stress level!

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                          #13
                          £6K? Wow... definitely better in my case to self-insure then. You can chuck the fag packet away now... ;-)

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